Are Two Breadwinners Better Than One?
The trite old phrase, less is more, has stuck around for centuries to remind us to not be gluttonous or greedy – yet it is hard to argue that the phrase still applies when it comes to your money. In the capitalistic system that we live in today, it is definitely an advantage to have more money available for spending and saving, especially when you have a spouse and children to raise.
Having two incomes – one from each spouse – is definitely a big question for many families to consider and brings up a lot of questions regarding taxes, retirement savings, family time, child care and even day-to-day scheduling and expenses. Before jumping into a big decision regarding employment for you or your spouse, consider the various outcomes and impacts that this additional salary will have on your family.
Benefits of Having a Secondary Household Income: Stability, Security and Savings
There is something very rewarding and positive about being employed beyond the obvious financial benefit of having more money. First of all, it helps reduce stress revolving around personal and family financial security, it develops a strong sense of independence and pride in an individual, and it promotes teamwork within a marriage.
With more money to work with, many families find a secondary household income to help with paying large loans and mortgages. Extra money can also help a couple with reaching financial savings goals for both retirement and for college savings funds, and can be critical in helping a family move beyond the dangerous pattern of living paycheck to paycheck for expenses and bills. It also helps to ease the major breadwinning responsibilities from one half of a couple, making the system of saving and spending more equitable in the long term.
Drawbacks of Having Both Spouses Work: Is the Extra Money Worth Its Cost?
One thing many couples realize is that having two working members of a family can lead to higher expenses that may not be easy to foresee. For example, a worker is not only responsible for his or her job, but also the transportation costs, clothing costs, food, child care, and other necessities that are needed for being a responsible and respectful employee at a company. These expenses associated with working can really add up, especially when it comes to starting a new job.
Remember: an extra salary from you or your spouse may give you more money to play with, but it could bump you into a tax bracket where you end up paying a higher percentage of your money to taxes, or could significantly impact your payments owed on other financial responsibilities. Many families are negatively surprised to learn this after the fact, when tax season rolls around each year and any extra money needed to pay a higher tax percentage has already been spent.
Investigating the Possibilities: Using Financial Tools to Measure the Impact of a Spouse’s Income
Before turning to a trained accountant or other financial expert for advice about managing income within your marriage, consider using free financial calculators that can help you approximate how a spouse’s income will impact the family budget and savings. The process of adding an extra income source will affect everything from retirement savings to taxes for a family, and a thorough calculator incorporates a variety of complex data points into a single, streamlined result.
For more information on how your finances may be impacted, for better or for worse, by a second income, consider bringing a report generated by a financial calculator to a certified public accountant. Reviewing your circumstances with a CPA will be able to help you consider all of the factors involved in your particular situation so that you can make a productive and positive financial decision for your family.
Ms. Jensen is a leading advocate for families and children and was the founder and president of ACES, The Association for Children for Enforcement of Support.
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